Cobra Bridges The Gap Between Employers

COBRA, which is the acronym for Consolidated Omnibus Budget Reconciliation Act

, was introduced in 1986 to make health insurance available to employees who were terminated or voluntarily left jobs which offered them health insurance. The only exception to this is employees who were fired for reasons of gross misconduct. Employers are also required to offer COBRA when they reduce the number of hours an employee works in a week so that he or she is no longer eligible for benefits. COBRA recipients must pay the full amount of the premium, as there is no longer a contribution by the former employer.

The normal length of eligibility for people in most cases are 18 months. However, there are exceptions that can be made to the policy if there is a death or disability of the primary policy holder that occurs in the first two months on being a COBRA policy holder. If a death has occurred, the surviving family members can remain on the COBRA policy for up to three years. If the policy holder becomes disabled, COBRA can become a total coverage policy for 29 months.

Why do people choose COBRA? For someone who was undergoing regular medical treatment while employed, it makes sense to have the same policy continue to provide coverage. Also, many insurance companies exclude coverage for pre-existing conditions which were present any time during the six months prior to signing up for coverage. This also applies to payment of prescription medication.

If a spouse and children are part of a persons financial responsibilities, they generally take advantage of the COBRA option so that coverage will continue so that a serious injury or illness to family members will be covered. This allows for less of a financial risk to a former employee and their family when they are making adjustments into another job or new career field.

Yet another reason people opt to continue health coverage through a former employer is that most new employers require a waiting period before a person becomes eligible for health insurance and other benefits. COBRA is seen as a bridge during times of moving from one employer to another.

Obtaining COBRA is possible. Employers offering health insurance to their employees must notify them within 30 days of termination that the employee has the right to continue his or her health care coverage through COBRA. The employee has 60 days to choose coverage and make the first premium payment. Coverage is not retroactive, and no benefits are paid prior to receiving the first payment.

by: Ethan Kalvin

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